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VAT Change in Switzerland

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The VAT rates in Switzerland has been increased on 1 January 2024. Specifically, the regular tax rate has been increased from 7.7% to 8.1%, the reduced tax rate from 2.5% to 2.6%, and the special tax rate from 3.7% to 3.8%. On 1 January 2030, all tax rates are due to be reduced again by 0.1%.

Info

The information in this article does not constitute any legally effective tax advice. JustOn cannot and must not provide such services. For any detailed questions, contact your tax consultant.

General Information

As a general rule for Switzerland, the applicable tax rate is determined neither by the invoice date nor the payment date, but rather by the time on which the service is delivered. In the case of long-term or periodic services (like subscriptions), the period in which the service is carried out determines the applicable tax rate.

In practice, tax rate changes meet different scenarios, which – depending on the business case – may require different adjustments to JustOn Billing & Invoice Management.

If you bill one-off products or if the service period of your invoices is closely limited, the following cases are possible:

Service or end of service period until 31 December 2023
You issue your invoices including a VAT of 7.7%, 2.5% or 3.7%.
Service or end of service period between 1 January 2024 and 31 December 2029
You must adjust your tax rules so that the produced invoices reflect the increased VAT rates of 8.1%, 2.6% or 3.8%.
Service or end of service period from 1 January 2030
You must re-adjust your tax rules so that the produced invoices will apply the reduced VAT rates of 8.0%, 2.5% or 3.7%.

For services that extend over a longer time period and thus extend beyond the deadlines, invoice line items are to be split along the tax rules' validity period. So one invoice line item becomes two – one with a service period until the deadline date and with the tax rate valid in this service period, and a second one with a new service period starting after the deadline date and with the tax rate valid in the new service period.

Make sure to use the appropriate taxation rule (Service Period) to determine the correct way to process invoice line items that span multiple time-based tax rules.

Separate accounting transactions by tax rates

Remember to separate bookings by tax rates. For correctly processing your VAT bookings, you therefore need booking accounts for 7.7%, 8.1%, 8.0%, 2.5%, 2.6%, 3.7% and 3.8%.

Adjusting Tax Rules

In any case, you must adjust your tax rules so that the generated invoices show the correct VAT rates:

  • 7.7%, 2.5% or 3.7% to 2023-12-31
  • 8.1%, 2.6% or 3.8% from 2014-01-01 to 2029-12-31
  • 8.0%, 2.5% or 3.7% as of 2030-01-01

To do so:

  1. Optionally, modify the tax rule list view to display the fields Start Date and End Date.

    For details, see Create a Custom List View in Salesforce Classic in the Salesforce Help.

  2. In the previously applicable tax rules for Switzerland, specify the end date 2023-12-31.

    Tax Rule Tax Rate Start Date End Date
    CH-standard 7.7 2023-12-31
    CH-reduced 2.5 2023-12-31
    CH-special 3.7 2023-12-31

  3. Create new tax rules for Switzerland that cover the period between 2024-01-01 to 2029-12-31 and the period after 2030-01-01.

    Tax Rule Tax Rate Start Date End Date
    CH-standard-2024 8.1 2024-01-01 2029-12-31
    CH-reduced-2024 2.6 2024-01-01 2029-12-31
    CH-special-2024 3.8 2024-01-01 2029-12-31
    CH-standard-2030 8.0 2030-01-01
    CH-reduced-2030 2.5 2030-01-01
    CH-special-2030 3.7 2030-01-01

    For details, see Start Dates and End Dates on Tax Rules.

  4. If necessary, adjust the taxation rule to determine the correct way to process invoice line items that span multiple time-based tax rules.

    Taxation Rule Description
    Service Period Forces the invoice line items to be split automatically along the tax rule validity period, so one invoice line item becomes two – one item with a service period until the deadline date and with the tax rate valid in this service period, and a second item with a new service period starting after the deadline date and with the tax rate valid in the new service period.
    Generally applicable for Switzerland
    End of Service Period Does not split the invoice line item and applies the tax rate that is valid at the end of the service period.
    Usually not applicable for Switzerland

    For details, see Managing Taxation Rules.

  5. If necessary, adjust the rules for the booking account allocation.

    Remember to separate bookings by tax rates. For correctly processing your VAT bookings, you therefore need booking accounts for 7.7%, 8.1%, 8.0%, 2.5%, 2.6%, 3.7% and 3.8%.

    For details, see Booking Account Allocation.

  6. If necessary, adjust the invoice templates to correctly display the taxes.

    For details, see Working With Templates.

Correcting Existing Invoices

Your business may have previously issued invoices that do not reflect the tax changes. In this case, these invoices must be corrected. To this end, proceed as follows:

  1. Cancel the affected current invoices and delete all invoices in Draft status.

    For details, see Canceling Invoices, Setting Up Finalization or Cancellation Using Flows and Setting Up Automatic Draft Invoice Deletion.

  2. Adjust the applicable tax rules on the relevant deadline date.

    For details, see Adjusting Tax Rules.

  3. Create the relevant invoices again.

    For details, see Executing an Invoice Run.

Check for correct invoicing dates

In order to apply the correct tax, make sure that the invoice line items have set a correct service period or, as a fallback, the invoice has set a correct date.